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PFG freezes accounts, CEO attempts suicide
- Thread starter Maverick74
- Start date
Quote from Rationalize:
So, for a customer who had run their account rationally, at a balance just above the minimum margin requirement, reducing their exposure to their broker .. one might wonder whether they should get their entire (margin) balance back, seeing as it is actually there at Jefferies. (Margining being the corner stone of centrally cleared exchange traded deriverturds.)
Maybe it's a question of who the customer was facing (PFG), vs ultimately where their funds sat (Jefferies).
I assume (sadly), that at the end of the day, this will revert to communism, where the prudent are ultimately forced to subsidise "others".
Your cash may be wholly at Jefferies, but it becomes common property compensation for the most exposed, highly intelligent guys, collecting a real 0% APR on imaginary PFG cash balances.
There are few dumber places to put unused cash than in a borkerage account.
Unfortunately brokers currently only have to post margin on the net positions of all of their customers.
So if longs and shorts in say the emini are about equal among a broker's customers, the broker has to post only a minimal amount of margin with its clearing firm and/or the exchange.
The CFTC is changing this soon.
Quote from comintel:
Unfortunately brokers currently only have to post margin on the net positions of all of their customers.
So if longs and shorts in say the emini are about equal among a broker's customers, the broker has to post only a minimal amount of margin with its clearing firm and/or the exchange.
The CFTC is changing this soon.
Thankfully. Considering your explanation which is shorter and clearer than the official release, one has to wonder at the level of naïveté that could theoretically accept $1 margin for $100 million overall trades. That could be the nett difference.
I posted in the PFG thread, thought the MFG folks may be interested that there's a senate hearing set, Wednesday, August 1, 2012, at 09:00 AM. The Committee will conduct a hearing to continue its ongoing examination into the collapse of financial firm MF Global as well as the recent collapse of Peregrine Financial Group.
There's always a live feed provided as well as a tape replay. The CCC has a link on their site for the hearing. http://customercoalition.org/
Senator Roberts provided some fireworks at the last hearing, I expect some serious questioning of both the MFG and PFG trustees, the NFA's Roth and CME's Duffy, CFTC's Gensler and Sommers.
I got violated in both MFG and PFG, both Senate Ag Committee Chairwoman Stabenow (D-MI) & Ranking Member Roberts (R-KS) are getting another letter from me as inept as that sounds, nevertheless.
There's always a live feed provided as well as a tape replay. The CCC has a link on their site for the hearing. http://customercoalition.org/
Senator Roberts provided some fireworks at the last hearing, I expect some serious questioning of both the MFG and PFG trustees, the NFA's Roth and CME's Duffy, CFTC's Gensler and Sommers.
I got violated in both MFG and PFG, both Senate Ag Committee Chairwoman Stabenow (D-MI) & Ranking Member Roberts (R-KS) are getting another letter from me as inept as that sounds, nevertheless.
Quote from dangerkitty:
I posted in the PFG thread, thought the MFG folks may be interested that there's a senate hearing set, Wednesday, August 1, 2012, at 09:00 AM. The Committee will conduct a hearing to continue its ongoing examination into the collapse of financial firm MF Global as well as the recent collapse of Peregrine Financial Group.
There's always a live feed provided as well as a tape replay. The CCC has a link on their site for the hearing. http://customercoalition.org/
Senator Roberts provided some fireworks at the last hearing, I expect some serious questioning of both the MFG and PFG trustees, the NFA's Roth and CME's Duffy, CFTC's Gensler and Sommers.
I got violated in both MFG and PFG, both Senate Ag Committee Chairwoman Stabenow (D-MI) & Ranking Member Roberts (R-KS) are getting another letter from me as inept as that sounds, nevertheless.
I think it's good that you write to them. If more people do perhaps they might do something about this scandalous situation.
I'm not American so even though I have money on the line I'm pretty much a spectator here.
Quote from comintel:
Unfortunately brokers currently only have to post margin on the net positions of all of their customers.
So if longs and shorts in say the emini are about equal among a broker's customers, the broker has to post only a minimal amount of margin with its clearing firm and/or the exchange.
The CFTC is changing this soon.
Well spotted. School boy mistake on my part.
Quote from dangerkitty:
.....
I got violated in both MFG and PFG, both Senate Ag Committee Chairwoman Stabenow (D-MI) & Ranking Member Roberts (R-KS) are getting another letter from me as inept as that sounds, nevertheless.
Ummm ... just for the safety of the rest of us, what broker are you using now? (Wink wink, nudge nudge)
Seriously, I have a lot of sympathy for you since I am sure there are others in this boat.
Quote from Rationalize:
Well spotted. School boy mistake on my part.
Brokers apparently can't make money on 2 dollar commissions, so they resort to many tricks to make their big money. The PFG CEO said that he managed to lose money almost from day one but made it up on volume and photoshop purchases.
All of us would be wise to ask the question "How are they screwing me at this particular place/ business? ...." A little thought would help you surface several surprises where money and life is concerned.
Banks are a spread business on money. With low interest rates, the FED is literally destroying their business every single day. The longer it goes on the more trouble when interest rates finally turn.
Retail is a spread business on goods (many treasures pretty worthless when removed from the store.)
Brokers are a spread business ( AKA bend over and spread em)
I have never figured out what government is all about. Some kind of security against things which government really can do little about? The ghost in the machine? A kind of insurance play against things they do to you in the first place? I am not sure.
Quote from StarDust9182:
Brokers apparently can't make money on 2 dollar commissions, so they resort to many tricks to make their big money. The PFG CEO said that he managed to lose money almost from day one but made it up on volume and photoshop purchases.
All of us would be wise to ask the question "How are they screwing me at this particular place/ business? ...." A little thought would help you surface several surprises where money and life is concerned.
.......
Also the CFTC change (if it really does go through later this year) is going to require brokers to post vastly larger security deposits (aka margin) with their clearing broker or the exchange.
This will greatly reduce the customer cash left with the broker to "invest" for the benefit of the broker.
Since much broker profitability is based on the various ways they can "invest" this customer cash, I am wondering how many brokers will go out of business. It should also force discovery of any other brokers who do not really have this customer cash unencumbered. There may be brokers with accounts labeled "Customer Segregated Funds" at the bank, who nevertheless have pledged these accounts for other purposes.
The CME has proposed that they hold the funds but rebate interest back to the firms.
Quote from comintel:
Also the CFTC change (if it really does go through later this year) is going to require brokers to post vastly larger security deposits (aka margin) with their clearing broker or the exchange.
This will greatly reduce the customer cash left with the broker to "invest" for the benefit of the broker.
Since much broker profitability is based on the various ways they can "invest" this customer cash, I am wondering how many brokers will go out of business. It should also force discovery of any other brokers who do not really have this customer cash unencumbered. There may be brokers with accounts labeled "Customer Segregated Funds" at the bank, who nevertheless have pledged these accounts for other purposes.